Financial District Information

30 ILCS 235/2.5 – Investment of public funds by a public agency shall be governed by a written investment policy adopted by the public agency. The level of detail and complexity of the investment policy shall be appropriate to the nature of the funds, the purpose for the funds, and the amount of the public funds within the investment portfolio. The policy shall address safety of principal, liquidity of funds, and return on investment and shall require that the investment portfolio be structured in such manner as to provide sufficient liquidity to pay obligations as they come due.

It is the policy of the Northwest Mosquito Abatement District (the “District”) to invest public funds in a manner which will provide maximum security, maintain adequate liquidity, and achieve a reasonable return while ensuring compliance with all applicable state statutes governing the investment of public funds. The District recognizes its unique role as a special-purpose unit of government and will manage investments in a manner consistent with its mission of public health protection and abatement services.

1. Scope
   This policy applies to all funds of the District that are under the authority of the Board of Trustees, including the operating fund, reserve fund, and any other funds established by the District.
2. Prudence
   The standard of prudence to be applied shall be the ‘prudent person’ standard. Investments shall be made with judgment and care, under circumstances prevailing, that persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the safety of capital as well as the probable income to be derived.
3. Objectives
   The primary objectives of the District’s investment activities, in priority order, shall be:
   1. Legality – Conformance with federal, state, and local statutes governing investment of public funds.
   2. Safety – Preservation of principal and protection of investment capital.
   3. Liquidity – Maintenance of sufficient liquidity to meet all operating requirements, including the requirement that the District maintain a minimum of seven (7) months of operating reserves.

   4. Yield – Attainment of a reasonable market rate of return throughout budgetary and economic cycles.
4. Delegation of Authority
   Management and administrative responsibility for the investment program is delegated to the Treasurer, who shall act in accordance with the District’s Board of Trustees’ direction. The Treasurer may establish written procedures and internal controls for the operation of the investment program consistent with this policy.
5. Authorized and Suitable Investments
   The District shall limit investments exclusively to United States Treasury Bills (“T-Bills”). Investments in other securities, derivatives, or instruments are prohibited. All investments shall be made in a manner that reflects the cash flow needs of the District.
6. Investment Accounts
   The District shall maintain separate accounts for operational funds and for investments. Specifically:
   1. A Corporate Investment Fund (“CIF”) NOW account for operational liquidity.
   2. A separate Investment CIF account to hold investment funds, including T-Bill holdings, for reserve purposes.
7. Investment Guidelines
   The District shall attempt to match investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the District will not directly invest in securities with maturities greater than two years. Reserve funds invested in T-Bills may exceed two years if such maturities align with projected reserve use. All transactions shall be evidenced by safekeeping receipts and written confirmations.
8. Diversification
   Because investments are limited solely to U.S. Treasury Bills, diversification shall be achieved by staggering maturities to meet liquidity requirements.
9. Internal Control
   The Director and Office Manager, under supervision of the Treasurer and with the aid of the District’s accountants, shall maintain internal controls to safeguard District assets. These controls shall ensure segregation of duties, custodial safekeeping, and verification of all transactions.
10. Performance Standards
    The District’s investment portfolio will be managed in accordance with the parameters of this policy. Performance shall be measured against U.S. Treasury benchmarks of comparable maturity and liquidity.
11. Reporting
    The Treasurer or Office Manager shall prepare a monthly investment report for the Board of Trustees. The report shall include the current market value of the portfolio, a summary of transactions, and confirmation that reserves equal to at least seven (7) months of operating expenses are maintained. An annual investment report shall also be provided.
12. Authorized Financial Institutions
    The Treasurer shall maintain a list of authorized financial institutions approved to provide investment services. All institutions must be of sound credit quality and approved by the Board of Trustees.
13. Ethics and Conflicts of Interest
    Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution of the District’s investment program or impair their ability to make impartial decisions.

1. Purpose
   The purpose of this Debt Management Policy (“Policy”) is to establish formal guidelines for the prudent, efficient and effective management of debt by the Northwest Mosquito Abatement District (the “District”). This Policy is intended to ensure that any debt issuance or obligation is justified, sustainable, transparent, and consistent with the District’s mission to provide mosquito abatement and public health protection services in a financially responsible manner.
2. Applicability
   This Policy applies to all debt obligations of the District, including but not limited to bonds, notes, leases, installment purchase agreements, lines of credit, and other forms of borrowing or debt-like instruments, whether currently outstanding or to be issued in the future.
3. Policy Statement
   The District shall incur debt only for capital improvements, major equipment, or other long-term assets whose useful life will approximately match or exceed the term of the debt. The District shall avoid borrowing for routine operating needs. Debt shall be structured so that repayments are made over periods that do not exceed the useful life of the asset financed. The District shall work toward maintaining excellent creditworthiness and reputation, by keeping debt at manageable levels, complying with all legal and disclosure obligations, and ensuring ongoing transparency with stakeholders.
4. Debt Limits & Financial Metrics
   To ensure debt remains at sustainable levels, the District shall adopt and abide by the following limits and metrics:
   • Maximum Total Debt Outstanding (Principal): No more than $10,000,000 in aggregate principal at any given time.
   • Debt Service Affordability: Annual debt service for tax-backed obligations shall not exceed 15% of audited governmental revenues, unless expressly approved by the Board with written findings
   • Legal Limits: All tax-backed debt will comply with applicable statutory debt limits, tax-rate caps, and levy authorization requirements.
   • Debt Maturity: Maximum of 20 years for any issuance.
   • Reserves: The District will prioritize pay-as-you-go capital financing and maintain at least seven (7) months of operating reserves separate from any debt service funds
5. Types of Debt & Acceptable Uses
   • Permitted Debt: Long-term capital projects (e.g., facility improvements), essential infrastructure, major equipment.
   • Prohibited or Discouraged Uses: Financing ongoing operational deficits; uses that do not provide long‑term benefit.
   • Short‑term borrowing or lines of credit may be used only for temporary financing (e.g., cash flow shortfalls), subject to explicit Board approval and with repayment schedules clearly defined.
6. Structuring Practices
   • Debt term should not exceed the useful life of the asset financed.
   • Repayment structure: The District prefers level debt service (equal payments) or declining principal amortization, unless another structure is justified.
   • Use of fixed‑rate debt is preferred; variable rate debt may be used only when justified by cost savings, risk mitigation, or matching to revenue flows, and subject to appropriate safeguards.

   • Redemption provisions: The District shall consider optional redemption (call provisions) if market conditions or flexibility warrant it.
   • If required by law or prudent practice, maintain a debt service reserve account and/or ensure credit enhancements or insurance as needed.
7. Debt Issuance Practices
   • Before issuing debt, the District shall prepare a financial feasibility study and cost/benefit analysis.
   • The District shall retain qualified external advisors as needed, including bond counsel, disclosure counsel, and financial or municipal advisors.
   • Selection of sale method (competitive, negotiated, private placement) shall be based on the specific circumstances of each issuance, seeking to minimize cost and risk.
   • Ensure debt issuance documents comply with all applicable state and federal law, including continuing disclosure requirements and covenant obligations.
8. Post‑Issuance / Ongoing Management & Monitoring
   • Monitor all outstanding debt for opportunities to refund or refinance if beneficial (lower interest rates, improved credit).
   • Maintain compliance with all covenants, legal requirements, arbitrage, and disclosure obligations.
   • Ensure public transparency: regular reporting to the Board of Trustees, and (if required) to bondholders or credit agencies.
   • Conduct periodic reviews of the District’s debt portfolio, including exposure to interest rate risk, maturity concentrations, and any variable rate obligations.
9. Roles & Responsibilities
   • Board of Trustees: Review and approve debt issuances, set policy and financial limits, oversee compliance.
   • Treasurer / Finance Director: Prepare studies, manage debt service scheduling, coordinate with advisors, ensure payments are made on time, ensure proper documentation and reporting.

   • Legal Counsel / Bond Counsel: Advise on legal obligations, disclosure, contracts, and compliance with relevant laws.
10. Amending the Policy
    This Policy shall be reviewed at least every three years, or more frequently if changes in law, market condition, or the District’s financial status warrant. Amendments must be approved by the Board of Trustees.

1. Purpose of Reserve and Liquidity Policy
   Adequate reserves and liquidity are critical to the stable operation of the Northwest Mosquito Abatement District (the “District”). Reserves provide assurance that the District can continue to meet operating, capital, and debt service obligations, maintain service levels in the event of unexpected circumstances, and safeguard public health functions. This policy sets forth guidelines to ensure the District maintains adequate reserves and liquidity consistent with Governmental Accounting Standards Board (GASB) requirements and sound financial management practices.
2. Classification of Fund Balances
   The District’s fund balances and reserves will be classified in accordance with GASB standards (GASB 54). These classifications include: Nonspendable, Restricted, Committed, Assigned, and Unassigned fund balances. Reserves identified in this policy will be reported in the annual audit in compliance with GASB requirements.
3. Reserves Established by the Board
   1. Operating Reserve (Assigned)
      The Operating Reserve provides contingency funds to cover unexpected revenue shortfalls, unforeseen expenditures, and emergency public health events. The target level for this reserve shall be no less than seven (7) months of operating expenses. Use of these funds requires Board approval.
   2. Cash Flow Reserve (Committed)
      The Cash Flow Reserve ensures sufficient liquidity between semi-annual property tax distributions. The target for this reserve shall be equivalent to one semi-annual property tax installment. Because this reserve serves a recurring operational need, use of this reserve does not require specific Board approval.
   3. Liability Reserve (Committed)
      The Liability Reserve shall be maintained to meet unforeseen liability costs, including insurance deductibles and workers’ compensation claims. The target for this reserve shall be equal to one year of liability and workers’ compensation insurance costs. Use of this reserve requires Board approval.
   4. Capital Replacement Reserve (Committed)
      The Capital Replacement Reserve provides funding for replacement of major equipment and significant repairs to facilities. An annual transfer, subject to available resources, shall be made from the General Fund into this reserve. Use of these funds requires Board approval.
4. Reserves Mandated by Law or Contract
   1. Capital Reserve (Restricted)
      The Capital Reserve holds funds from restricted sources such as grants, intergovernmental contributions, or bond proceeds. Funds may be used only for capital projects consistent with the District’s approved capital improvement plan. Use of this reserve requires Board approval.
   2. Debt Service Reserve (Restricted)
      When bonds are issued, a Debt Service Reserve shall be maintained in accordance with bond covenants. This reserve must equal the maximum annual debt service payment unless otherwise specified by the bond documents. Funds are to be used only in the event the District is unable to meet its debt service obligations. Use is governed by the bond documents and requires Board approval at issuance.
5. Guidelines for Use of Excess Funds
   Any year-end funds in excess of budgeted requirements shall be allocated in the following order unless otherwise directed by the Board:
   1. Transfer to Cash Flow Reserve until target is met.
   2. Transfer to Operating Reserve until target is met.
   3. Transfer to Liability Reserve until target is met.
   4. Transfer to Capital Replacement Reserve until target is met.
   5. Transfer to Capital Projects Fund for appropriation within the Capital Improvement Program.

   6. Re-appropriation within the subsequent year’s budget for one-time, non-recurring needs.
Reserves shall not be used to fund recurring annual operating expenditures.
6. Summary
   The District shall maintain reserves at levels sufficient to ensure continuity of mosquito abatement operations, mitigate financial risks, and support capital and debt service obligations. Reserves will be replenished as necessary and used only in a manner consistent with this policy and the District’s approved budgets. This Reserve and Liquidity Policy shall be reviewed periodically and adjusted as needed to reflect changes in the District’s financial position or operating environment.

These policies shall be reviewed on an annual basis by the Board of Trustees. Any changes must be recommended and approved by the Board of Trustees.

List of Attachments:

• Adoption of Investment Policy, December, 15 1999 (PDF)